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Judith, Both Buyer and Seller in Melbourne, FL

Can you explain CDD fees and do they make a house less desirable for a resale?

Asked by Judith, Melbourne, FL Fri Jan 4, 2008

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I am currently working with several buyers in the $185,000 - $225,000 range and one thing they have in common is that they do not want to look at homes in communities with cdd fees. Quite simply, cdd fees can add from $80 to $150 to your monthly payment. That is a big difference in how much home they can purchase. The payments payments never go away; the fees will cover the cost of capital improvements and future maintenance of the facilities and infrastructure. On the other hand, for some folks paying $1200 to $1800 per year for living in a particular community may be worth the money if they plan on using all the amenities available. You have to also keep in mind that in addition to the cdd fees you will have HOA dues. Bottom line, yes cdd fees can make a house less desirable for resale.
3 votes Thank Flag Link Wed Feb 10, 2010
Judith,

CDD stands for Community Development District, which finances and manages community developments. Tax-Free Bonds are issued to the developer to finance the cost of building the infrastructure of a development, including roads, utilities, and amenities including, pools, cluhouses, tennis courts, and golf courses. The CDD fees appear on the property tax bill. CDD fees are common. If a development does not have a CDD fee, the homeowners are still paying the fees, but through some other means, such as a higher price for the land or other developer charge. Since CDD fees are common, I don't think they make houses less desirable for resale.
3 votes Thank Flag Link Fri Jan 4, 2008
If a buyer does not use the amenities in a community, then paying a high CDD fee is undesirable. It i also NOT tax deductible, even though it shows up on your tax bill. I just wrote a pretty detailed article explaining Community Development District fees in great detail -
2 votes Thank Flag Link Wed Nov 2, 2011
Community Development Districts
Taxation without Representation ?
An Opinion by Jan Bergemann

More and more new communities in Florida are part of a Community Development District. Especially many politicians praise the advantages, while many knowledgeable homeowners consider it building more dictatorships in the "Land of the Free"!
If you're not familiar with Community Development Districts, here is a good definition:

CDDs (Community Development Districts) are special purpose taxing and development districts created in 1980 through passage of Florida State Statue # 190. The purpose of this Chapter 190 law was and is to promote housing development through use of tax-free bonds that developers use to lower the initial cost of these residential communities. Developers issue bonds to pay for initial infrastructure (sewers, roads, water supply, grading, utilities, etc.). Bonds are eventually paid off by residents over periods of 10-30 years.

The main advantage of CDDs is that housing is initially less expensive since major development costs are deferred and are financed through the use of tax-free bonds. This leads to the main disadvantage that housing costs are inflated over time as the bonds need to be repaid.

Developers like the Chapter 190 law because they are able to offer housing at a lower initial cost than would otherwise be the case.

County governments like the Chapter 190 law because developments that might otherwise not be built are in fact built because of the tax incentives and pricing advantages. Property tax revenues are eventually higher than would otherwise be the case since the developments are, in fact, built.

Residents like the Chapter 190 law because the initial buy-in cost of the housing is often lower than otherwise would be the case because the initial infrastructure costs are deferred and the houses cost less.

Unfortunately, developers have perverted the concept of the Chapter 190 law and turned it to their advantage at the expense of the residents.

Paying Double ?
Please take a closer look into what Community Development Districts really are : a place where homeowners pay more than once for the goodies coming with their "Dream Home"! When you, as a prospective buyer, are shown your new community, you will be shown all the nice amenities coming with your home : golf course, swimming-pools, club houses, tennis courts, shopping malls an
1 vote Thank Flag Link Wed Dec 9, 2015
Please expound on how one pays double and exactly what you mean by "developers have perverted the concept of the Chapter 190 law"? Your last post stops at "an" as if to suggest more was to follow but no follow-on or more link to the remainder of your thought.
Flag Thu Feb 4, 2016
Hi I am in contact with our legislator from Miami to see if there is a proposal amendment t to this Law.

Best,

Digna
Flag Tue Jan 5, 2016
do cdd board members get paid?
0 votes Thank Flag Link Sun Jan 31, 2016
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